In this article, we will cover and discuss what to do with proceeds from sale of a house. A frequently asked question is what to do with proceeds from sale of a house if you are going to take a break from homeownership. Home prices have been skyrocketing for almost a decade. Homeowners who are planning on selling their homes and/or selling their homes will most likely make a killing with the high home values throughout the country.
Unless you are a homeowner in a high taxed state, with the exception of California, such as Illinois or New York, the chances are you have made a significant profit on the sale of your home. California is facing a housing shortage due to the state’s tough environmental regulations and demand for housing.
What To Do If You Sell Your Home At a Profit?
Many home sellers are selling their homes at a huge profit due to skyrocketing home values. Home prices in California are double the national median average due to demand for homebuyers versus low inventory. Many Californians who are fleeing California to other lower-priced states can really cash in from the sale of their homes.
Despite the mass exodus of taxpayers and businesses out of California, the California Housing Market Forecast for 2021 remains strong. Home prices are expected to keep on increasing due to more demand versus inventory of housing. Average home prices in California is $600,000 versus the $298,650 median home value for the rest of the nation.
What To Do With Proceeds From Sale Of A House During A Booming Housing Market
The housing market today is booming. The housing market was booming prior to the coronavirus outbreak earlier this year in February 2020. However, after the COVID-19 outbreak, many so-called analysts and economists predicted another housing market crisis worse than the 2008 real estate meltdown. Boy, were they ever wrong? The housing market went in the other direction. It continued to skyrocket with no signs of correction. Many home sellers today are really cashing in.
Selling Your Home in a Hot Housing Market
Most homeowners who have owned their homes for at least five years or longer are seeing appreciation in equity-like they never dreamed of before. There are many possibilities on What To Do With Proceeds From Sale Of A House in today’s market. This holds true if you are a homeowner in California who sells your home. California home prices are double the national median average. You can get a lot of house for the money if you leave California to a lower-taxed with affordable housing. A large percentage of our business at Gustan Cho Associates are homebuyers and homeowners from California.
What To Do With Proceeds From Sale of a House
One of the first priorities on what to do with proceeds from the sale of a house is to make sure you put away the down payment for a future purchase of another home. You will not be a renter for the rest of your life unless you plan on traveling the world. Depending on how much you cash in from the sale of your home, the first thing you should do is save enough money to secure housing. You need to ask yourself questions and prepare a budget on the following topics. Am I going to buy or rent? If I am going to buy, home much money do I need for the down payment and/or closing costs on my next home purchase.
What To Do With Proceeds From Sale of a House If I Am Not Buying Another Home?
If I am going to rent temporarily, am I going to buy at a later date? If this is a yes, then you should save your down payment and closing costs and put it in a bank CD and/or money market account. The next thing most homeowners who cash in with proceeds from the sale of their home is to pay off high-interest debt such as credit cards. Many homeowners who have car loans also pay those off. Some homeowners will pay off their outstanding student loan debt that has been lingering all of their lives.
Is Paying Off Debts From Proceeds From The The Sale of Your Home a Good Idea?
Many people often contemplate what to do with proceeds from the sale of a house. Eliminating monthly debts is most consumer’s dream come true. Paying off monthly debt lowers the cost of living and expendable cash to be used for savings or other things. Many homeowners will have plenty of money left over for investments after setting aside the down payment for a new home, reserves, paying off all of their debts, and buying a few treats for themselves.
Keeping Money A Good Idea on What To Do With Proceeds From Sale of a House?
Although cash is king, if you have substantial money left over from the sale of your home, you should invest. Cash is a bad investment right now due to skyrocketing inflation and political unrest with the new administration. Risks vary widely in investments. Investing in a savings account, and money market account is alright but not with all the cash you have. Only invest a portion in cash because the dollar is being devalued due to inflation.
How Does Inflation Affect Money In The Bank?
Inflation is the highest it has ever been in forty years with no sign of a correction. The dollar is getting devalued like never before. Invest in conservative investments such as gold, silver, or other precious metals. CD’s and market market accounts is no longer a safe haven for conservative investors. You may research investing in mutual funds and/or the stock market. Again, the stock market is very volatile and can easily drop 50% or more in the coming months.
What Not To Do With The Proceeds From The Sale of Your Home
Nothing is wrong with treating yourself with the proceeds from the sale of your home. You can take a long vacation or buy yourself something you have always wanted. But do not blow it without thinking thoroughly about it. It is fine to splurge on a treat like vacations, high-priced toys such as a boat, jet ski, and other high-priced toys. However, what to do with proceeds from the sale of a home should be investing and saved. Buying new cars for yourself and your family members is one way of wasting money. Invest in precious metals such as silver and gold. Don’t invest in high-risk investments like the stock market, crypto, futures, futures, commodities, or high-risk investments.
Don’t Buy a New Car When Thinking on What To Do With Proceeds From Sale of a House
Everyone loves a new car. Who does not like a new car, truck, or sports car? New vehicles have skyrocketed in value. Many people are using the excuse a new car or truck is an excellent investment because many are selling at above MSRP. This is a crock and don’t fall in for this. Any new car is a depreciating asset. A brand new pick up truck or SUV can easily cost you over $100,000.
In five years, you can bet the new pick-up and/or SUV will be work less than half of what you paid for. New cars are the worst investments you can make. The day you drive that new car off the car lot, it depreciates by 30% or more. Do not go on shopping sprees. Think about the various investments that suit your needs and you will feel comfortable. Re-evaluate your retirement plans. How long are you away from retirement? Is your retirement funded sufficiently?
Evaluate Your Retirement Accounts When Thinking on What To Do With Proceeds From Sale of a House
Consult with a financial planner and go over your current retirement plan. If your retirement accounts are poorly funded, you may want to consider maxing out the 401k contribution from your paycheck and live off on some of your savings from the proceeds from the sale of your home. Contributing to your IRA and/or 401k will get you a larger tax break. Up to $6,500 per year can be moved to a Roth IRA Account The Roth IRA account is not tax deductible on a Roth contribution but the funds will accumulate on a tax-deferred basis. Upon retirement, you will get a tax-free income source.
How You Should Invest Proceeds From The Sale of Your House
There are many options on what to do with proceeds from sale of a house. However, when thinking about what to do with proceeds from sale of a house, you should have a very careful and conservative approach. Think about diversifying your investments. Stocks are good investments but there are degrees of risk levels. Talk to your financial planner/advisor about the various types of investments that you may benefit from and your risk tolerance level. Other investments to consider are Gold, Silver, Real Estate, Annuities, and mutual funds.
This article on what to do with proceeds from sale of a house was updated on July 24th, 2022.
